Double space and drive space with 'transparent ' compression was cool. I wish there was something as ubiquitous for USB drives nowadays.
I've lost so much data with DoubleSpace! Not something I miss :-)
Those files were created by chkdsk from orphan files (with no entry point in the directories) in the File Allocation Table (the table that gives the "FAT" name to the filesystem). After chkdsk, the filesystem was consistent again.
Such orphans appeared when the OS crashed or the system went off during file writing operations. Of course when that happened while writing on a compressed filesystem, the problem was not a lost file but a corruption. Sometimes the compressed filesystem was just entirely lost.